Automated Meter Reading:
Two StrategiesThe question is whether to own or lease,
but each route offers its own advantages.
The industry continues to debate the costs and technology of automated meter reading, even as some regulators insist on immediate implementation.
It is a choice, but might it soon be a mandate? Federal and state regulators-now more proactive after the industry credit crisis-want to know utility costs with precision (especially with all the rate increase requests recently), and they want to achieve conservation, market monitoring, or demand-side measures possible only through automated meter reading (AMR). Utilities that haven't adopted metering technology may soon be ordered to do just that.
Take Idaho Power, which went into a cost adjustment proceeding last year asking for a rate increase to spread over three years. Instead, it was ordered to recover costs in one year, and to adopt a 30-cent surcharge to look into issues relating to time-of-use (AMR implementation was not the initial focus), according to Idaho PUC officials. The Energy Efficiency Advisory Group (EEAG), established as a result of the Idaho PUC order, would examine how these policies might blunt future rate increases.
Furthermore, in two other cases, 1 the commission asked the EEAG to evaluate and report to the Idaho PUC on the viability of a time-of-use residential metering program by Sept. 12, 2002. After soliciting comments on Idaho Power's report, the commission declined to authorize residential time-of-use rates.
However, following the study, the Idaho PUC directed the company to begin installing an AMR system this year, with installation completed in 2004. The company disagreed with the commission staff's calculation of the cost-effectiveness of AMR, and it now contends that implementing AMR over a four-year period (2004-07) would cost $86.5 million. Idaho Power predicted that its customers would incur greater costs through AMR for the first six years after the meters are installed and would not break even until 2024. However, Idaho Power believes AMR will become more cost-effective as technology advances, lowering the price of technology, and as AMR is viewed as a viable option for lowering employee costs.
At press time, the Idaho PUC was requesting comments by Aug. 15 on: 1) whether the company should be directed to install AMR; 2) how advanced metering technology could help the company and its ratepayers make the most of advanced technology; 3) the types of technology that should be employed; 4) the time frame for implementation; and 5) how the company could recover costs associated with AMR.
The issue of whether a PUC should order AMR implementation is a point of contention, as is the price of implementation. For instance, the Demand Response and Advanced Metering Coalition (DRAM), in comments filed with the Idaho PUC, believes the $70 million to $80 million estimate for an AMR system "is substantially too high." DRAM believes implementation would cost $30 million. Furthermore, whether to adopt fixed radio network, mobile, phone line, or power line carrier technology is debated heatedly within demand-side circles and among utility executives.
Also, the recent merger of AMR vendors SchlumbergerSema and Itron has many utility executives worried that one platform and service will be favored over the other, a worry that